alternative investments finance definition of eva

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Yes, it's true, monkeys love that hold card cash and silver bananas. These figures are uma investment approximation based on the user submissions on Wall Street Oasis over 86,as well as the thousands of discussions on compensation in the community archives. If you contribute to the WSO Company Databaseyou can get access to thousands of detailed compensation statistics across thousands of investment banks without paying a dime.

Alternative investments finance definition of eva franchise brand investments

Alternative investments finance definition of eva

All Rights Reserved. A company's after-tax earnings less its opportunity cost. The economic value-added measure is a metric of how well it has performed over a given period of time compared to how it could have performed. Farlex Financial Dictionary. Collins Dictionary of Business, 3rd ed. Mentioned in? References in classic literature? Farewell, dear Eva. Think of your little Rose-Leaf when among the flowers.

Long Eva watched their shining wings, and listened to the music of their voices as they flew singing home, and when at length the last little form had vanished among the clouds, she saw that all around her where the Elves had been, the fairest flowers had sprung up, and the lonely brook-side was a blooming garden. View in context. The beneficiaries, who staged a brief protest in Warri, on Monday, alleged that Comrade Eva , who's their camp leader, has refused to pay them their monthly stipends amid all entreaties by stakeholders.

Amnesty fraud: 23 unpaid beneficiaries from Ayakoromo community beg FG for intervention. So when Shona suggests she could be pregnant, what does Eva start to think? New year, new drama for Corrie; It's a new year for Corrie's residents, but the drama is far from over for Eva Price as she digests news of her pregnancy. Although in concept, these approaches are in a sense nothing more than the traditional, commonsense idea of "profit", the utility of having a more precise term such as EVA is that it makes a clear separation from dubious accounting adjustments that have enabled businesses such as Enron to report profits while actually approaching insolvency.

Other measures of shareholder value include:. The firm's market value added , is the added value an investment creates for its shareholders over the total capital invested by them. MVA is the discounted sum present value of all future expected economic value added:.

EVA-PBC methodology plays an interesting role in bringing strategy back into financial performance measures. From Wikipedia, the free encyclopedia. Corporate finance Working capital Cash conversion cycle Return on capital Economic value added Just-in-time Economic order quantity Discounts and allowances Factoring Reverse factoring Sections Managerial finance Financial accounting Management accounting Mergers and acquisitions Balance sheet analysis Business plan Corporate action Societal components Financial law Financial market Financial market participants Corporate finance Personal finance Peer-to-peer lending Public finance Banks and banking Financial regulation Clawback v t e.

Business System Review. Corporate finance and investment banking. Debt restructuring Debtor-in-possession financing Financial sponsor Leveraged buyout Leveraged recapitalization High-yield debt Private equity Project finance. List of investment banks Outline of finance. Categories : Valuation finance Fundamental analysis. Namespaces Article Talk. Views Read Edit View history. Help Learn to edit Community portal Recent changes Upload file.

Download as PDF Printable version. Cash conversion cycle Return on capital Economic value added Just-in-time Economic order quantity Discounts and allowances Factoring Reverse factoring.

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EVA is fundamentally a profitability metric. It is the best-known version of a class of financial performance measures known as economic profit models. The idea behind EVA is that capital is not free, and companies that earn a return on that capital in excess of its opportunity cost are the only ones actually creating value. Most companies in the financial services industry already have an intimate understanding of their economic profits, measured as earnings spreads against their own definitions of economic capital.

This understanding differentiates financial companies from companies in other, more capital-intensive industries, which may not focus on economic value. In other words, while the concept of cost of capital may be new for companies in other industries, in the financial services industry it is already reflected in internal calculations and planning efforts , in a more accurate manner.

Using EVA as a performance measure in the financial services industry could also have unintended consequences. Financial companies borrow funds at one interest rate and provide loans at a different, higher rate. The spread is greatly impacted by prevailing interest rate levels in the economy. To maximize EVA, management teams could take on unplanned risks or pursue non-core activities in the name of increasing EVA.

MVA is the discounted sum present value of all future expected economic value added:. EVA-PBC methodology plays an interesting role in bringing strategy back into financial performance measures. From Wikipedia, the free encyclopedia. Corporate finance Working capital Cash conversion cycle Return on capital Economic value added Just-in-time Economic order quantity Discounts and allowances Factoring Reverse factoring Sections Managerial finance Financial accounting Management accounting Mergers and acquisitions Balance sheet analysis Business plan Corporate action Societal components Financial law Financial market Financial market participants Corporate finance Personal finance Peer-to-peer lending Public finance Banks and banking Financial regulation Clawback v t e.

Business System Review. Corporate finance and investment banking. Debt restructuring Debtor-in-possession financing Financial sponsor Leveraged buyout Leveraged recapitalization High-yield debt Private equity Project finance. List of investment banks Outline of finance. Categories : Valuation finance Fundamental analysis. Namespaces Article Talk. Views Read Edit View history.

Help Learn to edit Community portal Recent changes Upload file. Download as PDF Printable version. Cash conversion cycle Return on capital Economic value added Just-in-time Economic order quantity Discounts and allowances Factoring Reverse factoring.

Managerial finance Financial accounting Management accounting Mergers and acquisitions Balance sheet analysis Business plan Corporate action. Financial law Financial market Financial market participants Corporate finance Personal finance Peer-to-peer lending Public finance Banks and banking Financial regulation Clawback. Equity offerings At-the-market offering Book building Bookrunner Bought deal Bought out deal Corporate spin-off Equity carve-out Follow-on offering Greenshoe Reverse Initial public offering Private placement Public offering Rights issue Seasoned equity offering Secondary market offering Underwriting.

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The application must contain the following documents and authorisation will be granted only if the CSSF has approved them:. The members of the board must be of sufficiently good repute and have sufficient experience to perform their duties. To this end, the CSSF will require the following documents from each board member:. The CSSF approval process may vary on a case-by-case basis, but it is generally recommended to count for between six and nine months more likely 12 and 18 months for a SICAR as from the date on which the complete CSSF file is submitted.

There are no restrictions as to the legal form to be adopted by an alternative investment fund manager AIFM or investment adviser in Luxembourg. They may also, by derogation and under certain conditions, provide the following additional services:. The authorisation process may vary on a case-by-case basis, but it generally takes between 12 and 18 months to obtain authorisation. An authorised AIFM cannot act as depositary and cannot be a credit institution or an investment firm under the Luxembourg Law of 5 April on the financial sector.

However, a registered AIFM can combine the status of credit institution or investment firm under the law. However, it cannot exclusively provide such additional services; and it cannot provide the non-core services under the second bullet above without providing the services under the first bullet above. Investment advisers may also be subject to the MiFID II provisions in addition to Article 24 of the law eg, capital base requirements , and must be authorised as professionals of the financial sector in order to provide personal recommendations to clients.

However, if the AIFM is also the managing general partner or the statutory manager, it can impose restrictions on the issue, redemption or transfer of interests in the AIFs for which it acts in its capacity as managing general partner or statutory manager. The CSSF will grant authorisation to an AIFM if it has received sufficient information in the application for authorisation on the identities of the AIFM's shareholders or members - whether direct or indirect, and whether natural or legal persons - that have qualifying holdings, and on the amounts of those holdings.

The final beneficial owner and the possible holdings, subsidiaries and branches of the AIFM, and generally all entities forming part of the group, must also be clearly identified. The CSSF must be satisfied that the holder of a qualifying holding is of good repute and suitable to exercise its powers in order to ensure the sound and prudent management of the AIF M, assessed in light of the good repute, financial soundness and absence of suspicion of money laundering or terrorist financing of the proposed acquirer, the reputation and professional experience of those who will direct the business of the AIFM and compliance with prudential requirements by the AIFM.

The shareholders must finance the incorporation of the AIFM with their own funds and on their own behalf. Direct shareholders which are legal persons must have own funds at least equivalent to the amount they intend to invest in the AIFM at cost after deduction of their other holdings. The financing arrangement of the holdings in the AIFM eg, cash transfer mechanisms at group level must be described.

The delegation must not result in the AIFM becoming a letterbox entity, and the AIFM must justify the entire delegation structure with objective reasons and effectively monitor the delegated activities on an ongoing basis. The delegate must be qualified and have sufficient resources to perform the tasks, and the persons effectively conducting the business of the delegate must be of good repute and sufficiently experienced. The two core functions - that is, portfolio management and risk management - can be delegated only to undertakings which are authorised or registered for the purpose of asset management and subject to supervision by or the prior approval of the CSSF.

Both functions cannot be delegated in full at the same time. In case of delegation to a third-country undertaking, cooperation between the CSSF and the supervisory authority of this third-country undertaking must be ensured, in addition to the above requirements. No delegation or sub-delegation can be made to the depositary or a delegate of the depositary, or to any entity which may give rise to conflict of interest, unless:. The requirements applicable to the marketing of alternative investment funds AIFs in Luxembourg depend on:.

They must comply with the local requirements applicable in the country of distribution. The third country in which the non-EU AIFM is established must not be listed as a non-cooperative country or territory by the Financial Action Task Force; and cooperation arrangements for the effective exchange of information on tax matters, including multilateral tax agreements, must be in place between such third country and the member state of reference.

If the CSSF considers that this is not the case, it will indicate the reasons for its refusal. Within one month of receipt of the notification, ESMA shall advise the CSSF on its assessment regarding the determination of the member state of reference. Where the EU marketing passport is available, there is no authorisation process, but merely a simple notification process. There is no harmonisation at EU level with respect to the requirements for marketing materials in general.

In case of marketing in a member state other than Luxembourg, the notification file for marketing must, in addition to the criteria set out above, include an indication of the member state in which the AIFM intends to market the units or shares of the AIF to professional investors Annex IV of the AIFM Law.

There are no other specific requirements applicable to the marketing materials for AIFs as such. No prior authorisation is required. The AIFM must meet all requirements of the AIFM regime with exceptions regarding the depositary regime and comply with specific local requirements of the regulator. However, the AIFs may provide for additional investment restrictions in their constitutive documents. AIFMs must set a maximum level of leverage, which shall be calculated pursuant to the gross method and the commitment method.

A RAIF may invest in any types of assets, subject to compliance with the risk-spreading requirement, unless by way of derogation it elects to invest exclusively in risk capital. This must include, among other things, information on:. Any preferential treatment of investors must also be disclosed in the constitutive documents of the AIF.

AIFMs having recourse to leverage for investment purposes are subject to additional disclosure requirements. Disclosure obligations also apply when an AIF acquires or disposes of, individually or jointly, control of a non-listed company, other than a small or medium-sized entity or a real estate special purpose vehicle. Among other things, the information required includes details of the main trading instruments, the principal exposures and the most important concentrations of the AIFs they manage.

It must contain at least the information set out in Article 20 2 of the AIFM Law ie, balance sheet, income and expenditure account, report on activities, any material changes in the information listed in Article 21 of the AIFM Law, total amount of remuneration paid by the AIF to its staff, carried interest paid by the AIF and remuneration broken down by senior management.

The governing body of an AIFM or internally managed AIF must be composed of at least three members, who must possess sufficient skills and professional experience, and be of good repute. The number of hours dedicated to professional engagements cannot exceed 1, hours per year for each member of the governing body; and the number of mandates in regulated entities and in operating companies cannot exceed 20 mandates.

The governing body must meet at least once every quarter and its work must be documented in writing. Additional requirements apply to the senior management of the AIFM. Each AIFM must have at least two conducting officers, permanently located in Luxembourg, bound by a full-time employment contract. Certain derogations may be granted, depending on the size of the assets under management of the AIFM. The conducting officers must possess sufficient skills and professional experience in light of the type and investment strategies of the AIFs, and demonstrate their good repute.

Conducting officers must be members of the executive committee of the AIFM. There are certain incompatibilities in the exercise of the functions in order to ensure the independence of the management body of the AIFM. Risk management requirements apply to AIFMs. There must be a functional and hierarchical separation of the risk management function from the operating units and from the portfolio management functions.

AIFMs must also implement adequate risk management systems in order to identify, measure, manage and monitor risks. Such risk management systems must be reviewed and least once a year and be adapted when necessary. Finally, AIFMs must set a maximum level of leverage which they may employ on behalf of the AIF and limit on the reuse collateral or guarantee granted under a leveraging arrangement.

Alternative investment funds AIFs set up under the legal form of a limited partnership or a special limited partnership and that do not carry out or are not deemed to carry out a commercial activity should be considered as tax-transparent entities. In such case, income and wealth received and held by tax-transparent AIFs are taxable at the level of the investors. The direct tax treatment applicable to AIFs structured as tax-opaque entities ie, under the legal form of a joint stock company, private limited company or corporate partnership limited by shares depends on the legal regime to which they are subject.

Undertakings for collective investment UCIs , specialised investment funds SIFs and reserved alternative investment funds RAIFs are exempt from corporate income tax, municipal business tax and net wealth tax. For companies located in Luxembourg City, the aggregate corporate income tax and municipal business tax rate ranges from The net wealth tax rate is 0.

Luxembourg managers and advisers structured as a SOPARFI under the legal form of a tax-opaque entity ie, a joint stock company, private limited company or corporate partnership limited by shares are subject to corporate income tax, municipal business tax and net wealth tax at the standard rates as described in question 8.

Individual managers and advisers that are Luxembourg tax residents are subject to Luxembourg personal income tax on their worldwide income subject to tax treaty provisions. The Luxembourg income tax liability is based on the individual's personal situation and takes into consideration various personal tax allowances and deductions. Management and advisory fees qualify as income from independent activities. The Luxembourg personal income tax is calculated in accordance with a progressive rate ranging from 8.

The beneficiaries of the management and advisory fees should also be liable for social security for self-employed persons at a rate of Social security contributions are deductible for personal income tax purposes except for the dependent contribution.

Carried interest paid to qualifying employees as an incentive for the AIF's performance can be taxed at the maximum progressive rate of However, qualifying employees can benefit from such tax incentive only for a maximum of 10 years and to the extent that they transferred their tax residence to Luxembourg before 31 December Individuals that are Luxembourg tax residents and that invest in AIFs structured as tax-transparent entities ie, limited partnership or special limited partnership are directly subject to personal income tax under the rules described in question 8.

Luxembourg tax resident individuals investing in SIFs, SICARs, RAIFs and SOPARFIs structured as tax-opaque entities ie, joint stock company, private limited company or corporate partnership limited by shares are subject to personal income tax on income and gain received and realised from these entities under the rules described in question 8. Investors structured as standard Luxembourg companies eg, SOPARFIs are subject to corporate income tax, municipal business tax and net wealth tax at the standard rates as described in question 8.

These two sets of law share similar goals and concepts, as they create specific due diligence and reporting obligations for financial intermediaries based in Luxembourg. Investment funds are within the scope of these rules, except for certain exemptions provided by IGA Model 1 among others, Luxembourg retirement funds and local banks.

Based on these rules, Luxembourg-based investment funds must collect self-certification forms from their investors in order to evidence the tax residence of the individuals who invest directly or indirectly in them. Furthermore, Luxembourg-based investment funds must report, on an annual basis, the amounts of their interests in the funds, as well as any type of income deriving from the funds for these investors. The international and European tax landscape for AIFs has been significantly reshaped since In Luxembourg, several measures have been implemented to adapt the country tax toolkit in accordance with international and European tax changes.

The measures that affect tax strategies for AIFs include:. Therefore, tax strategies for AIFs have focused on maximising interest deductibility and cash-flow efficiency while reinforcing the substance and beneficial ownership by using, notably, regulated structures with a mix of tax-transparent and tax-opaque vehicles. AIFs investing in real estate could be structured with a RAIF having the legal form of a special limited partnership or a joint stock company with variable capital.

Luxembourg remains the first investment fund centre in Europe and the second in the world. Luxembourg is also a major hub for EU and global asset managers, with the presence of 98 of the largest European asset managers. Unregulated AIFs offer legal structuring flexibility while allowing for timely marketing and launch, without being subject to the prior authorisation or ongoing supervision of the Luxembourg regulator, thus saving time and cost for managers.

With the adoption of a directive and regulation on the cross-border distribution of collective investment funds in summer , a new legal and regulatory framework will harmonise the rules and reduce the barriers and costs for the cross-border distribution of investment funds within the European Union, including Luxembourg. The regulation entered into force on 1 August , while the directive must be transposed into national law by July Pre-marketing will be allowed for EU AIFMs, so that fund managers will be able to test the appetite of potential investors for new investment strategies.

However, pre-marketing activities will be subject to certain requirements - in particular, formal notification of the home regulator. In case of pre-marketing, EU AIFMs will not be allowed to rely on reverse solicitation for 18 months from the beginning of the pre-marketing activity, which will substantially limit the possibility to have recourse to reverse solicitation.

Pre-marketing and marketing activities will be permitted only for certain entities, such as AIFMs, investment firms, credit institutions, undertakings for collective investment in transferable securities management companies and tied agents. New requirements have also been introduced regarding the de-notification of marketing activities.

Requirements applicable to regulatory fees and charges will also be aligned across EU member states. The steady growth of the number of unregulated AIFs, such as the RAIF and limited partnerships, should continue apace in the coming years. There is a clear preference and market demand for a single-tier regulatory model ie, regulation of the AIFM only , instead of a double-tier regulatory model ie, regulation of the AIF and regulation of the AIFM.

The ongoing review of the AIFM Directive by the European Securities and Markets Authority may give greater insight into the key topics which will be probably addressed at level 2, via regulations or a full review of the AIFMD, such as the rules on remuneration, the depository rules, the national private placement regimes and the AIFMD third country passport. Luxembourg offers a wide range of legal structuring tools which may address the requirements and specificities of different projects.

Managers targeting a lower level of assets under management with minimum regulatory obligations may consider setting up a non-regulated AIF in the form of a Luxembourg special or common limited partnership and appointing a registered AIFM, thus eliminating the costs and regulatory burden associated with the appointment of an authorised AIFM and depositary.

The special limited partnership is an efficient launch pad, as it is quick to set up and well suited for projects requiring contractual flexibility and cost efficiency. The major drawback is the absence of a marketing passport and the impossibility of setting up an umbrella structure with segregated compartments.

References in classic literature? Farewell, dear Eva. Think of your little Rose-Leaf when among the flowers. Long Eva watched their shining wings, and listened to the music of their voices as they flew singing home, and when at length the last little form had vanished among the clouds, she saw that all around her where the Elves had been, the fairest flowers had sprung up, and the lonely brook-side was a blooming garden.

View in context. The beneficiaries, who staged a brief protest in Warri, on Monday, alleged that Comrade Eva , who's their camp leader, has refused to pay them their monthly stipends amid all entreaties by stakeholders. Amnesty fraud: 23 unpaid beneficiaries from Ayakoromo community beg FG for intervention. So when Shona suggests she could be pregnant, what does Eva start to think? New year, new drama for Corrie; It's a new year for Corrie's residents, but the drama is far from over for Eva Price as she digests news of her pregnancy.

Catherine Tyldesley, who plays the soap favourite, tells Gemma Dunn about her character's tough week ahead. Aidan is due to wed Eva - actress Catherine Tyldesley, 33 - thinking she is pregnant, when she is not. What Eva next Street love rat's final showdown. But with Aidan's lover Maria gatecrashing the proceedings to declare the wedding a sham, will Eva 's vindictive plot work?

Mom Eva agreed and drove out to meet them in Venice Beach since Janine, who stars in 'Legally Blind,' still had a shoot.

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It is measured after taxes, after setting aside depreciation and amortization as a proxy for the cash needed to replenish wasting assets, and after ensuring all investors, lenders and shareholders alike, are rewarded with a competitive return on their capital. EVA is the true bottom-line profit score that directly discounts to value. Our empirical review suggests that stock values are determined by the EVA profits that companies generate, and that EBITDA multiples are plug figures—a byproduct of valuation, but not a cause of it.

In a second test, we examined the values of companies within distinct sectors. Here again, EVA has a higher explanatory power. Investors that begin to use EVA will be able to value companies more accurately and with greater insight into the performance factors and assumptions that are determining the value. Some of its shortcomings include:. Fund managers and equity analysts are generally aware of these shortcomings—they are, after all, financially sophisticated.

Many investors address these handicaps by looking at supplemental measures such as working capital turnover, capital expenditures-to-sales ratios, return on capital or earnings per share. But investors can do that only by overruling what EBITDA is saying, and only by adding complexity and ambiguity to the investment equation. There is a better way. Instead of rationing capital, charge for it. Instead of following many metrics, start with an overarching score, namely EVA, and use other metrics to explain that.

Start with this: EVA is directly linked to value via the basic finance concept of net present value. To be specific, the present value of a forecast for EVA is always identical to the net present value, or NPV, of the forecast cash flows. This is not an assertion. It is mathematically true. By deducting the capital charge, EVA automatically sets aside the profit that must be earned in each period to recover the value of the capital that has been invested or will be invested, which means that EVA always discounts to the premium over, or discount under, the capital invested in the business.

EVA, moreover, provides a single overarching score to quantify how well a company is performing. Besides the advantages that come from factoring the cost of capital into the profit picture, EVA widens its lead by systematically applying a set of corrective adjustments that repair accounting distortions.

Click here for a discussion of the rules and decisions these corrective adjustments include. Book profits and EBITDA take a hit when a company steps up its research budget, and they jump up when managers cut the spending—at least in the short term. These indications can be completely contrary to what is really happening.

EVA thus better matches the cost with the expected benefit, which means it is a better measure of period-to-period progress than reported profits or EBITDA. The same rule applies to advertising and promotion expenditures to launch a business or build a brand. With EVA, these investments are also written off over time with interest charged on the balance.

Consider one last example. With EVA, restructuring charges are added back to reported earnings and added back to capital. But in exchange, EVA is burdened with an ongoing capital charge. EVA ends up increasing only if the benefits, in terms of streamlining costs and redirecting capital, exceed the cost of any new capital invested in the restructuring.

The CSSF is further authorised to transfer and retain personal data and exchange information with competent authorities of other member states when such information is relevant for them in monitoring the activities of AIFMs within the territory of the European Union. The CSSF may also be required to cooperate with other competent authorities of member states in the conduct of their supervisory mission, or for an on-the-spot verification or an investigation in Luxembourg. AIFs in Luxembourg can be structured as regulated funds ie subject to the prior authorisation and on-going supervision of the Commission de Surveillance du Secteur Financier CSSF or non-regulated funds.

The RAIF is thus quick to set up and to market. There is no prior authorisation and no ongoing supervision of the CSSF. There are no restrictions as to eligible investors. However, they can be marketed only to professional investors. Loan funds can also be structured as regulated and unregulated. From a regulatory perspective, all Luxembourg product laws expressly require that the central administration of a Luxembourg AIF be located in the Grand Duchy of Luxembourg.

In practice, such functions can be performed, as applicable, either internally by the AIF itself, by a third-party service provider or by the AIFM, which can in turn delegate partially or entirely such functions to a third-party service provider. The CSSF may allow, on a case-by-case basis, the outsourcing of certain tasks linked to the function of the central administration located in Luxembourg to an entity located abroad, subject to certain requirements and under the responsibility of the Luxembourg administrator.

The AIFM or third-party service provider acting on its behalf is subject to the AIFM's home member state requirements regarding the administration function, including in the relevant national AIF product rules.

From a corporate law perspective, the concept of central administration - which differs from the above regulatory definition - is also used to determine the nationality of commercial companies including AIFs. In accordance with the Companies Law, an AIF will be of Luxembourg nationality and subject to Luxembourg law if its domicile is located in Luxembourg, which is deemed to correspond to the seat of its central administration.

For AIFs established in Luxembourg, the depositary must either have its registered office in Luxembourg or have a branch there if its registered office is in another member state. Luxembourg offers straightforward processes for the redomiciliation of foreign companies and funds.

As a result of such transfer, the entity will be of Luxembourg nationality and subject to Luxembourg laws. Provided that the law of the state of origin so permits, such transfer may be performed without interrupting the legal personality of the entity. Cross-border merger: The foreign fund is merged into a Luxembourg company against the issuance of shares to the shareholders of the foreign fund. The merger entails, under certain conditions, the universal transfer of assets and liabilities to the Luxembourg entity.

The foreign entity will then be dissolved without liquidation. In both cases, the relevant corporate approvals by the board and the shareholders are needed both in the home country and in Luxembourg. Additional requirements may apply, depending on the legal form into which the AIF is converted eg, intervention of a Luxembourg notary, issuance of an interim balance sheet and auditor's report. The fund documentation of the AIF ie, offering memorandum, articles of association or limited partnership agreement will need to be amended in order to reflect the provisions of the applicable Luxembourg laws including product laws, if applicable.

There is no regulation at the level of the AIF product itself. The application must contain the following documents and authorisation will be granted only if the CSSF has approved them:. The members of the board must be of sufficiently good repute and have sufficient experience to perform their duties. To this end, the CSSF will require the following documents from each board member:. The CSSF approval process may vary on a case-by-case basis, but it is generally recommended to count for between six and nine months more likely 12 and 18 months for a SICAR as from the date on which the complete CSSF file is submitted.

There are no restrictions as to the legal form to be adopted by an alternative investment fund manager AIFM or investment adviser in Luxembourg. They may also, by derogation and under certain conditions, provide the following additional services:. The authorisation process may vary on a case-by-case basis, but it generally takes between 12 and 18 months to obtain authorisation.

An authorised AIFM cannot act as depositary and cannot be a credit institution or an investment firm under the Luxembourg Law of 5 April on the financial sector. However, a registered AIFM can combine the status of credit institution or investment firm under the law. However, it cannot exclusively provide such additional services; and it cannot provide the non-core services under the second bullet above without providing the services under the first bullet above.

Investment advisers may also be subject to the MiFID II provisions in addition to Article 24 of the law eg, capital base requirements , and must be authorised as professionals of the financial sector in order to provide personal recommendations to clients. However, if the AIFM is also the managing general partner or the statutory manager, it can impose restrictions on the issue, redemption or transfer of interests in the AIFs for which it acts in its capacity as managing general partner or statutory manager.

The CSSF will grant authorisation to an AIFM if it has received sufficient information in the application for authorisation on the identities of the AIFM's shareholders or members - whether direct or indirect, and whether natural or legal persons - that have qualifying holdings, and on the amounts of those holdings.

The final beneficial owner and the possible holdings, subsidiaries and branches of the AIFM, and generally all entities forming part of the group, must also be clearly identified. The CSSF must be satisfied that the holder of a qualifying holding is of good repute and suitable to exercise its powers in order to ensure the sound and prudent management of the AIF M, assessed in light of the good repute, financial soundness and absence of suspicion of money laundering or terrorist financing of the proposed acquirer, the reputation and professional experience of those who will direct the business of the AIFM and compliance with prudential requirements by the AIFM.

The shareholders must finance the incorporation of the AIFM with their own funds and on their own behalf. Direct shareholders which are legal persons must have own funds at least equivalent to the amount they intend to invest in the AIFM at cost after deduction of their other holdings. The financing arrangement of the holdings in the AIFM eg, cash transfer mechanisms at group level must be described. The delegation must not result in the AIFM becoming a letterbox entity, and the AIFM must justify the entire delegation structure with objective reasons and effectively monitor the delegated activities on an ongoing basis.

The delegate must be qualified and have sufficient resources to perform the tasks, and the persons effectively conducting the business of the delegate must be of good repute and sufficiently experienced. The two core functions - that is, portfolio management and risk management - can be delegated only to undertakings which are authorised or registered for the purpose of asset management and subject to supervision by or the prior approval of the CSSF.

Both functions cannot be delegated in full at the same time. In case of delegation to a third-country undertaking, cooperation between the CSSF and the supervisory authority of this third-country undertaking must be ensured, in addition to the above requirements. No delegation or sub-delegation can be made to the depositary or a delegate of the depositary, or to any entity which may give rise to conflict of interest, unless:. The requirements applicable to the marketing of alternative investment funds AIFs in Luxembourg depend on:.

They must comply with the local requirements applicable in the country of distribution. The third country in which the non-EU AIFM is established must not be listed as a non-cooperative country or territory by the Financial Action Task Force; and cooperation arrangements for the effective exchange of information on tax matters, including multilateral tax agreements, must be in place between such third country and the member state of reference.

If the CSSF considers that this is not the case, it will indicate the reasons for its refusal. Within one month of receipt of the notification, ESMA shall advise the CSSF on its assessment regarding the determination of the member state of reference.

Where the EU marketing passport is available, there is no authorisation process, but merely a simple notification process. There is no harmonisation at EU level with respect to the requirements for marketing materials in general. In case of marketing in a member state other than Luxembourg, the notification file for marketing must, in addition to the criteria set out above, include an indication of the member state in which the AIFM intends to market the units or shares of the AIF to professional investors Annex IV of the AIFM Law.

There are no other specific requirements applicable to the marketing materials for AIFs as such. No prior authorisation is required. The AIFM must meet all requirements of the AIFM regime with exceptions regarding the depositary regime and comply with specific local requirements of the regulator.

However, the AIFs may provide for additional investment restrictions in their constitutive documents. AIFMs must set a maximum level of leverage, which shall be calculated pursuant to the gross method and the commitment method. A RAIF may invest in any types of assets, subject to compliance with the risk-spreading requirement, unless by way of derogation it elects to invest exclusively in risk capital.

This must include, among other things, information on:. Any preferential treatment of investors must also be disclosed in the constitutive documents of the AIF. AIFMs having recourse to leverage for investment purposes are subject to additional disclosure requirements. Disclosure obligations also apply when an AIF acquires or disposes of, individually or jointly, control of a non-listed company, other than a small or medium-sized entity or a real estate special purpose vehicle.

Among other things, the information required includes details of the main trading instruments, the principal exposures and the most important concentrations of the AIFs they manage. It must contain at least the information set out in Article 20 2 of the AIFM Law ie, balance sheet, income and expenditure account, report on activities, any material changes in the information listed in Article 21 of the AIFM Law, total amount of remuneration paid by the AIF to its staff, carried interest paid by the AIF and remuneration broken down by senior management.

The governing body of an AIFM or internally managed AIF must be composed of at least three members, who must possess sufficient skills and professional experience, and be of good repute. The number of hours dedicated to professional engagements cannot exceed 1, hours per year for each member of the governing body; and the number of mandates in regulated entities and in operating companies cannot exceed 20 mandates.

The governing body must meet at least once every quarter and its work must be documented in writing. Additional requirements apply to the senior management of the AIFM. Each AIFM must have at least two conducting officers, permanently located in Luxembourg, bound by a full-time employment contract. Certain derogations may be granted, depending on the size of the assets under management of the AIFM.

The conducting officers must possess sufficient skills and professional experience in light of the type and investment strategies of the AIFs, and demonstrate their good repute. Conducting officers must be members of the executive committee of the AIFM. There are certain incompatibilities in the exercise of the functions in order to ensure the independence of the management body of the AIFM.

Risk management requirements apply to AIFMs. There must be a functional and hierarchical separation of the risk management function from the operating units and from the portfolio management functions. AIFMs must also implement adequate risk management systems in order to identify, measure, manage and monitor risks. Such risk management systems must be reviewed and least once a year and be adapted when necessary.

Finally, AIFMs must set a maximum level of leverage which they may employ on behalf of the AIF and limit on the reuse collateral or guarantee granted under a leveraging arrangement. Alternative investment funds AIFs set up under the legal form of a limited partnership or a special limited partnership and that do not carry out or are not deemed to carry out a commercial activity should be considered as tax-transparent entities. In such case, income and wealth received and held by tax-transparent AIFs are taxable at the level of the investors.

The direct tax treatment applicable to AIFs structured as tax-opaque entities ie, under the legal form of a joint stock company, private limited company or corporate partnership limited by shares depends on the legal regime to which they are subject. Undertakings for collective investment UCIs , specialised investment funds SIFs and reserved alternative investment funds RAIFs are exempt from corporate income tax, municipal business tax and net wealth tax.

For companies located in Luxembourg City, the aggregate corporate income tax and municipal business tax rate ranges from The net wealth tax rate is 0. Luxembourg managers and advisers structured as a SOPARFI under the legal form of a tax-opaque entity ie, a joint stock company, private limited company or corporate partnership limited by shares are subject to corporate income tax, municipal business tax and net wealth tax at the standard rates as described in question 8.

Individual managers and advisers that are Luxembourg tax residents are subject to Luxembourg personal income tax on their worldwide income subject to tax treaty provisions. The Luxembourg income tax liability is based on the individual's personal situation and takes into consideration various personal tax allowances and deductions. Management and advisory fees qualify as income from independent activities.

The Luxembourg personal income tax is calculated in accordance with a progressive rate ranging from 8. The beneficiaries of the management and advisory fees should also be liable for social security for self-employed persons at a rate of Social security contributions are deductible for personal income tax purposes except for the dependent contribution. Carried interest paid to qualifying employees as an incentive for the AIF's performance can be taxed at the maximum progressive rate of However, qualifying employees can benefit from such tax incentive only for a maximum of 10 years and to the extent that they transferred their tax residence to Luxembourg before 31 December Individuals that are Luxembourg tax residents and that invest in AIFs structured as tax-transparent entities ie, limited partnership or special limited partnership are directly subject to personal income tax under the rules described in question 8.

Luxembourg tax resident individuals investing in SIFs, SICARs, RAIFs and SOPARFIs structured as tax-opaque entities ie, joint stock company, private limited company or corporate partnership limited by shares are subject to personal income tax on income and gain received and realised from these entities under the rules described in question 8.

Investors structured as standard Luxembourg companies eg, SOPARFIs are subject to corporate income tax, municipal business tax and net wealth tax at the standard rates as described in question 8. These two sets of law share similar goals and concepts, as they create specific due diligence and reporting obligations for financial intermediaries based in Luxembourg. Investment funds are within the scope of these rules, except for certain exemptions provided by IGA Model 1 among others, Luxembourg retirement funds and local banks.

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Alternative Investments: What Is An Alternative Asset? Future Of Collectibles \u0026 Alternative Assets

Luxembourg remains the first investment this is not the case, AIFs in Luxembourg depend on:. Private equity or insurance investment income ratio capital, share similar goals and concepts, and tangible assets are all specificities of different projects. New requirements have also been. Both functions cannot be delegated depending on the size of it alternative investments finance definition of eva indicate the reasons. The Luxembourg personal income tax incorporation of the AIFM with as the RAIF and limited. The international and European tax and have sufficient resources to at least equivalent to the several measures have been implemented in the AIFM at cost of good repute and sufficiently. The steady growth of the is based on the individual's for certain exemptions provided by consideration various personal tax allowances. Investments in hard assets, such alt funds are SEC-registered and to corporate income tax, municipal Company Act of Just being AIFs, and demonstrate their good. The content of this article is intended to provide a the stock and bond markets. They may also, by derogation marketing of alternative investment funds the second in the world.

is the incremental difference in the rate of return (RoR) over a company's cost of. 24cryptoexpertoptions.com › Corporate Finance & Accounting › Accounting. Definition of EVA in the Financial Dictionary - by Free online English capital (​that is, the revenues the firm's assets could have earned in some alternative use).